Crampton, Suzanne

Mishra, Jitendra

English

Scholarworks@GVSU

Seidman Business Review
Volume 8 | Issue 1 Article 6
1-1-2002
Crisis Management in West Michigan Firms
Suzanne Crampton
Grand Valley State University
Jitendra Mishra
Grand Valley State University
Follow this and additional works at: http://scholarworks.gvsu.edu/sbr
Copyright ©2002 by the authors. Seidman Business Review is reproduced electronically by ScholarWorks@GVSU. http://scholarworks.gvsu.edu/
sbr?utm_source=scholarworks.gvsu.edu%2Fsbr%2Fvol8%2Fiss1%2F6&utm_medium=PDF&utm_campaign=PDFCoverPages
Recommended Citation
Crampton, Suzanne and Mishra, Jitendra (2002) "Crisis Management in West Michigan Firms," Seidman Business Review: Vol. 8: Iss. 1,
Article 6.
Available at: http://scholarworks.gvsu.edu/sbr/vol8/iss1/6
Crisis Management in West Michigan Firms 
Suzanne Crampton. Ph.D .. and Jitendra Mishra. Ph.D. 
Department of Management. Seidman School of Business 
Corporate crises are disasters that can cause extensive damage to human life, economic well being, and the environment. The number of corporate crisis experiences is increasing at 
an alarming rate . While planning cannot prevent every crisis, the 
planning process can teach an organization how to cope more 
effectively with whatever does occur. No crisis ever happens as it 
was envisioned or planned for. For this reason, effective crisis 
management is a never-ending process. It seems a fundamental 
paradox regarding crisis management may be true. The less 
vulnerable an organization thinks it is, the fewer crises it prepares 
for; as a result, the more vulnerable it becomes. The reverse is 
also true . The more vulnerable an organization thinks it is, the 
more crises it prepares for; as a result, the less vulnerable it is 
likely to be. 
Data Collection 
A crisis management survey was sent to 420 public and private 
organizations in West Michigan that employ 50 or more individuals. 
Our overall response rate was 42.2%. The primary objective of 
this survey was to sample attitudes and perceptions of West 
Michigan managers toward crisis management and its stages. 
Responses were requested concerning their definitions of a crisis 
and crisis management, phases/anatomy of a crisis, plans and 
communication during a crisis, and crisis management in the 
respondents' organizations. 
The questionnaire was divided into six parts containing a total of 
57 questions. All responses were ranked on a scale of one to five, 
with 1 being strongly agree; 2 = agree; 3 = neither agree nor 
disagree; 4 = disagree; and 5 = strongly disagree. The question­
naires were addressed to the Vice-President of Human Resources . 
Respondents were asked to rate/choose each statement based on 
the way it best reflects their perceptions and thinking. 
Results 
In the first section of our survey, our intent was to identify the 
respondents' definitions of crisis and crisis management. The 
definition of a crisis accepted by 79% of the respondents was that 
a crisis is a situation that runs the risk of escalating in intensity, 
interfering with the normal operations of a business, and damaging 
the company's bottom line. The smaller the organization, the 
higher the percentage of managers that chose the definition of a 
crisis as a situation that runs the risk of escalating in intensity, 
interfering with the normal operations of a business and damaging 
the company's bottom line The definition of crisis chosen by 
62% of the respondents is a situation that has reached a critical 
phase. When cross-indexed with age, we note that the older the 
respondents , the more likely they were to define a crisis as a 
situation that has reached a critical phase. The older respondents 
have most likely had to deal with several more crises than the 
managers in the 20-29 age group 
who might be more likely to view a 
situation as a crisis if it affects the 
company's bottom line. 
The second question in this section 
dealt with the respondents idea of a 
good definition of "Crisis 
Management." The definition selected 
by the most managers (73%) was the 
art of removing much of the risk and 
uncertainty to allow you more control 
over your own destiny or that of the company. More managers at 
the director level agreed on this as the best definition of crisis 
management, followed by senior corporate managers. The 
middle managers and those in the "other" category (which would 
include lower level managers) had the lowest agreement rate. This 
may be because they feel they do not possess the authOrity to 
remove the risk and uncertainty in order to control their own 
destinies the way the higher level managers do. 
Anatomy of a Crisis 
The first phase of a crisis is where the warning signs occur to 
indicate the company may be heading for a crisis. Our survey 
asked the respondents what they felt was the most important 
thing to do in this pre-crisis stage . The answer selected by the 
highest number of respondents (86%) was to develop a plan to be 
instituted in the event of a crisis. The managers recognized the 
need to put together a crisis management plan as soon as the first 
signs of a crisis occur. Their responses, however, also indicate 
they do not have a crisis management plan in place, but they 
would put one together when they notice the first signs of a crisis. 
The statements with the next highest agreement ratings were to 
conduct an inventory of the company's strengths and vulnerabilities 
and to analyze a worst case scenario. These analyses will help the 
company determine what areas may need attention. However, it 
appears many respondents do not feel the need to examine the 
companys weak spots until the signs of a crisis appear. 
The second phase of a crisis is when some damage has been 
done, and how much additional damage occurs depends on how 
the crisis is managed. Most respondents agreed that the most 
important thing to do during this stage is to gather the facts and 
determine the scope of the problem (93%) Once the scope of the 
crisis has been determined, steps can be taken to control the crisis. 
Establishing a corporate response ranked second as the most 
important thing to be done in this stage. Managers realize the 
importance that public relations can play in the wake of a crisis. 
How the public hears about and reacts to the company's crisis is 
one of the few things over which managers have some control. It 
Seidman Business Review Winter 2002 
II 
is important for a company involved in a crisis to develop a 
corporate response and to avoid sending mixed signals 
Phase three of a crisis is the clean-up or post-mortem phase­
a time of recovery, self-analysis , and healing Our respondents felt 
that the best thing to do in this stage was to analyze what went 
wrong or right and take appropriate anions (9 1 %). This could 
even be a time for congratulations if the company demonstrated 
good crisis management skills. Attempting to determine what can 
be done to speed up resolving the crisis once and for all received 
the second highest agreement rate. This phase can linger indefi­
nitely if action is not taken to resolve the crisis. A survey taken of 
the nation's top chief executive officers of the Fortune 500, 
conducted by Steven Fink, author of (Jisis Management: Planning 
Jar the Inevitable, revealed that for those companies without a 
crisis management plan, the effects of the chronic crisis stage 
lasted two and one-half times longer than for companies that 
were prepared with a crisis management plan. 
The final phase of a crisis is when business 
gets back to normal-until the next crisis. 
Taking action to be sure a similar crisis does 
not occur again was identified as the most 
important thing to do in this stage (89%). 
The managers may have felt that since they 
had been through a clisis, they were particu­
larly susceptible to a similar crisis and needed 
to be better prepared. Wri ting up procedures 
for the steps to be taken if the same crisis 
would alise was the next critical activity identified Also, 88 
percent of the managers agreed that identifying what the "real" 
crisis was is an important thing to do in the resolution stage. Once 
the crisis is over, it is important to sit back and analyze which was 
the "real" crisis and which were the mini-crises resulting from the 
actual crisis. 
Crisis Management Plans 
In this section, respondents were asked to identify the best thing 
to do when using a team approach The majority (81 %) believe 
you should select a central core for each crisis management team 
with other departments trained to join the team if the crisis is in 
their area of expertise (ie., a financial crisis requires financial 
people). Depending on the type of business, the centra l core 
members o[ a permanent crisis management team might include 
eiLher the chief executive officer or someone from senior manage­
ment, the chief financial olTicer, the chief intemal communicator, 
and perhaps the head of the legal department This central core 
should draw up a list of names to be added to the crisis manage­
ment team, depending on the type of crisis at hand. Thus, when 
the crisis hits, the company is prepared to call upon the appropriate 
people. The response selected the second most often by 76% of 
our respondents said the best thing to do was to prepare a 
contingency plan which asks and answers its own "what if' 
queslions. This plan would allow management to look at all the 
possibilities for a potential crisis and examine various strategies 
[or dealing with the crisis. 
Crisis Communication 
The most important thing to do regarding communication during 
a crisis is to make certain the company speaks as "one voice" to 
avoid giving out confUSing reports (95%) It is essential for the 
communicator to have two things First, the communicator in a 
crisis must have immediate access to authority. Second, the 
communicator must have authori ly. Providing information in a 
straightforward, honest manner was also agreed on as being 
important to good crisis communication. This was followed by a 
need to update frequently and stay on record (give out Lhe 
necessary facts and tell the truth) Simple, honest communication 
was viewed as vital during a crisis. 
The final secti on asked respondents whether their organization has 
a prepared crisis management plan Only 27% of the respondents 
indicated their organization has a plan prepared When compared 
with the survey results obtained by Steven Fink (author of Crisis 
Management Planning Jar the Inevitable), we see that in the Fortune 
500 companies, 50% of those who 
responded said they did not have a prepared 
crisis management plan. A cross tabulation 
by type of organization illustrated that serv­
ice organizations are much more likely to 
have a prepared crisis management plan 
than manufacturing facilities. W hen asked 
whether their organization wou ld respond 
well if a crisis should occur, 57% of our 
respondents fe lt their organization would 
respond well. This is much lower than the 
results obtained by Fink among the Fortune 
500 companies, where 97% of the respondents felt confident their 
organization would respond well to a crisis. Forty-five percent of 
our respondents felt there was better than a 50% chance that their 
organization would experience a crisis. This is particularly 
interesting since only 27% of the respondents reported having a 
crisis management plan. In addition, only 18% of Lhe respondents 
indicated that their organization had prepared a crisis manage­
ment plan after experiencing a sehous crisis. This involves some 
denial on the part of the organization. Even after being involved in 
a serious crisis, organizations sLill fail to see the advantages of 
preparing a crisis management plan. 
Discussion 
An alarming portion of West Michigan companies do not have a 
crisis management plan. Some organizations have not considered 
the possibility that a crisis could happen to them. W hile those 
who partiCipated in the survey seem to reali ze the importance of 
having a plan , they tend to wait until the first stage of the crisis 
before they begin planning. West Michigan companies also 
appear hesitant to learn how other organizations have dealt with a 
similar crisis. This could be very helpful to a company faced with 
a crisis. By leaming what mistakes have already been made by 
others, it is hoped that a company could avoid making those 
same mistakes. 
An alarming portion of West 
Michigan companies do not 
have B crisis management plan. 
Some organizations have not 
considered the possibility that a 
crisis could happen to them. 
IIiI
www.gvsu.edu/ssb/ 


Crisis Management in West Michigan Firms

Seidman Business ReviewVolume 8 | Issue 1 Article 61-1-2002Crisis Management in West Michigan FirmsSuzanne CramptonGrand Valley State UniversityJitendra MishraGrand Valley State UniversityFollow this and additional works at: http://scholarworks.gvsu.edu/sbrCopyright ©2002 by the authors. Seidman Business Review is reproduced electronically by ScholarWorks@GVSU. http://scholarworks.gvsu.edu/sbr?utm_source=scholarworks.gvsu.edu%2Fsbr%2Fvol8%2Fiss1%2F6&utm_medium=PDF&utm_campaign=PDFCoverPagesRecommended CitationCrampton, Suzanne and Mishra, Jitendra (2002) "Crisis Management in West Michigan Firms," Seidman Business Review: Vol. 8: Iss. 1,Article 6.Available at: http://scholarworks.gvsu.edu/sbr/vol8/iss1/6Crisis Management in West Michigan Firms Suzanne Crampton. Ph.D .. and Jitendra Mishra. Ph.D. Department of Management. Seidman School of Business Corporate crises are disasters that can cause extensive damage to human life, economic well being, and the environment. The number of corporate crisis experiences is increasing at an alarming rate . While planning cannot prevent every crisis, the planning process can teach an organization how to cope more effectively with whatever does occur. No crisis ever happens as it was envisioned or planned for. For this reason, effective crisis management is a never-ending process. It seems a fundamental paradox regarding crisis management may be true. The less vulnerable an organization thinks it is, the fewer crises it prepares for; as a result, the more vulnerable it becomes. The reverse is also true . The more vulnerable an organization thinks it is, the more crises it prepares for; as a result, the less vulnerable it is likely to be. Data Collection A crisis management survey was sent to 420 public and private organizations in West Michigan that employ 50 or more individuals. Our overall response rate was 42.2%. The primary objective of this survey was to sample attitudes and perceptions of West Michigan managers toward crisis management and its stages. Responses were requested concerning their definitions of a crisis and crisis management, phases/anatomy of a crisis, plans and communication during a crisis, and crisis management in the respondents' organizations. The questionnaire was divided into six parts containing a total of 57 questions. All responses were ranked on a scale of one to five, with 1 being strongly agree; 2 = agree; 3 = neither agree nor disagree; 4 = disagree; and 5 = strongly disagree. The question­naires were addressed to the Vice-President of Human Resources . Respondents were asked to rate/choose each statement based on the way it best reflects their perceptions and thinking. Results In the first section of our survey, our intent was to identify the respondents' definitions of crisis and crisis management. The definition of a crisis accepted by 79% of the respondents was that a crisis is a situation that runs the risk of escalating in intensity, interfering with the normal operations of a business, and damaging the company's bottom line. The smaller the organization, the higher the percentage of managers that chose the definition of a crisis as a situation that runs the risk of escalating in intensity, interfering with the normal operations of a business and damaging the company's bottom line The definition of crisis chosen by 62% of the respondents is a situation that has reached a critical phase. When cross-indexed with age, we note that the older the respondents , the more likely they were to define a crisis as a situation that has reached a critical phase. The older respondents have most likely had to deal with several more crises than the managers in the 20-29 age group who might be more likely to view a situation as a crisis if it affects the company's bottom line. The second question in this section dealt with the respondents idea of a good definition of "Crisis Management." The definition selected by the most managers (73%) was the art of removing much of the risk and uncertainty to allow you more control over your own destiny or that of the company. More managers at the director level agreed on this as the best definition of crisis management, followed by senior corporate managers. The middle managers and those in the "other" category (which would include lower level managers) had the lowest agreement rate. This may be because they feel they do not possess the authOrity to remove the risk and uncertainty in order to control their own destinies the way the higher level managers do. Anatomy of a Crisis The first phase of a crisis is where the warning signs occur to indicate the company may be heading for a crisis. Our survey asked the respondents what they felt was the most important thing to do in this pre-crisis stage . The answer selected by the highest number of respondents (86%) was to develop a plan to be instituted in the event of a crisis. The managers recognized the need to put together a crisis management plan as soon as the first signs of a crisis occur. Their responses, however, also indicate they do not have a crisis management plan in place, but they would put one together when they notice the first signs of a crisis. The statements with the next highest agreement ratings were to conduct an inventory of the company's strengths and vulnerabilities and to analyze a worst case scenario. These analyses will help the company determine what areas may need attention. However, it appears many respondents do not feel the need to examine the companys weak spots until the signs of a crisis appear. The second phase of a crisis is when some damage has been done, and how much additional damage occurs depends on how the crisis is managed. Most respondents agreed that the most important thing to do during this stage is to gather the facts and determine the scope of the problem (93%) Once the scope of the crisis has been determined, steps can be taken to control the crisis. Establishing a corporate response ranked second as the most important thing to be done in this stage. Managers realize the importance that public relations can play in the wake of a crisis. How the public hears about and reacts to the company's crisis is one of the few things over which managers have some control. It Seidman Business Review Winter 2002 II is important for a company involved in a crisis to develop a corporate response and to avoid sending mixed signals Phase three of a crisis is the clean-up or post-mortem phase­a time of recovery, self-analysis , and healing Our respondents felt that the best thing to do in this stage was to analyze what went wrong or right and take appropriate anions (9 1 %). This could even be a time for congratulations if the company demonstrated good crisis management skills. Attempting to determine what can be done to speed up resolving the crisis once and for all received the second highest agreement rate. This phase can linger indefi­nitely if action is not taken to resolve the crisis. A survey taken of the nation's top chief executive officers of the Fortune 500, conducted by Steven Fink, author of (Jisis Management: Planning Jar the Inevitable, revealed that for those companies without a crisis management plan, the effects of the chronic crisis stage lasted two and one-half times longer than for companies that were prepared with a crisis management plan. The final phase of a crisis is when business gets back to normal-until the next crisis. Taking action to be sure a similar crisis does not occur again was identified as the most important thing to do in this stage (89%). The managers may have felt that since they had been through a clisis, they were particu­larly susceptible to a similar crisis and needed to be better prepared. Wri ting up procedures for the steps to be taken if the same crisis would alise was the next critical activity identified Also, 88 percent of the managers agreed that identifying what the "real" crisis was is an important thing to do in the resolution stage. Once the crisis is over, it is important to sit back and analyze which was the "real" crisis and which were the mini-crises resulting from the actual crisis. Crisis Management Plans In this section, respondents were asked to identify the best thing to do when using a team approach The majority (81 %) believe you should select a central core for each crisis management team with other departments trained to join the team if the crisis is in their area of expertise (ie., a financial crisis requires financial people). Depending on the type of business, the centra l core members o[ a permanent crisis management team might include eiLher the chief executive officer or someone from senior manage­ment, the chief financial olTicer, the chief intemal communicator, and perhaps the head of the legal department This central core should draw up a list of names to be added to the crisis manage­ment team, depending on the type of crisis at hand. Thus, when the crisis hits, the company is prepared to call upon the appropriate people. The response selected the second most often by 76% of our respondents said the best thing to do was to prepare a contingency plan which asks and answers its own "what if' queslions. This plan would allow management to look at all the possibilities for a potential crisis and examine various strategies [or dealing with the crisis. Crisis Communication The most important thing to do regarding communication during a crisis is to make certain the company speaks as "one voice" to avoid giving out confUSing reports (95%) It is essential for the communicator to have two things First, the communicator in a crisis must have immediate access to authority. Second, the communicator must have authori ly. Providing information in a straightforward, honest manner was also agreed on as being important to good crisis communication. This was followed by a need to update frequently and stay on record (give out Lhe necessary facts and tell the truth) Simple, honest communication was viewed as vital during a crisis. The final secti on asked respondents whether their organization has a prepared crisis management plan Only 27% of the respondents indicated their organization has a plan prepared When compared with the survey results obtained by Steven Fink (author of Crisis Management Planning Jar the Inevitable), we see that in the Fortune 500 companies, 50% of those who responded said they did not have a prepared crisis management plan. A cross tabulation by type of organization illustrated that serv­ice organizations are much more likely to have a prepared crisis management plan than manufacturing facilities. W hen asked whether their organization wou ld respond well if a crisis should occur, 57% of our respondents fe lt their organization would respond well. This is much lower than the results obtained by Fink among the Fortune 500 companies, where 97% of the respondents felt confident their organization would respond well to a crisis. Forty-five percent of our respondents felt there was better than a 50% chance that their organization would experience a crisis. This is particularly interesting since only 27% of the respondents reported having a crisis management plan. In addition, only 18% of Lhe respondents indicated that their organization had prepared a crisis manage­ment plan after experiencing a sehous crisis. This involves some denial on the part of the organization. Even after being involved in a serious crisis, organizations sLill fail to see the advantages of preparing a crisis management plan. Discussion An alarming portion of West Michigan companies do not have a crisis management plan. Some organizations have not considered the possibility that a crisis could happen to them. While those who partiCipated in the survey seem to reali ze the importance of having a plan , they tend to wait until the first stage of the crisis before they begin planning. West Michigan companies also appear hesitant to learn how other organizations have dealt with a similar crisis. This could be very helpful to a company faced with a crisis. By leaming what mistakes have already been made by others, it is hoped that a company could avoid making those same mistakes. An alarming portion of West Michigan companies do not have B crisis management plan. Some organizations have not considered the possibility that a crisis could happen to them. IIiIwww.gvsu.edu/ssb/ 

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Crisis Management in West Michigan Firms

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